FDIC Rescinds Guidance on Multiple Re-Presentment NSF Fees There has been a clear pattern lately of regulatory pullbacks that banks may be tempted to welcome as a return of discretion, flexibility and maybe even freedom. Less guidance, less second-guessing, less pressure on practices that had come under increasing scrutiny. But there is, of course, an important distinction to make — flexibility and certainty aren’t the same thing. When an agency rescinds a meaningful consumer-protection position without replacing it with a clear framework, banks might not actually get a safer runway. In fact, they arguably get a murkier one. In an area like repeated non-sufficient funds (NSF) fees, where the unfairness and deception concerns never really went away (instead being reframed and passed around like a game of hot potato), that may be less reassuring than it first appears, especially given how easily the regulatory pendulum could swing back and recast the same conduct as unfair all along. Which brings us to the latest example: The FDIC has now done exactly what many expected of this leadership team and rescinded FIL-32-2023, the agency’s 2023 guidance on multiple re-presentment NSF fees, effective immediately. In the rescission, the agency said the prior guidance was “overly broad in scope” and created uncertainty about when disclosures regarding re-presentments might still give rise to “unfairness” concerns under Section 5 of the FTC Act. In its place, the FDIC offers a far thinner admonition: Institutions should ensure their disclosures accurately reflect their practices and comply with current law — essentially, the regulatory equivalent of removing the highway guardrails and then posting a sign that says, “Drive Safely.” Again, banks (and industry advocates) can’t be blamed for seeing this as a positive, tidy deregulatory move. One less piece of guidance to worry about, less supervisory friction, more room to lean on disclosure and less danger that a clearly described practice will still be second-guessed as unfair. It also speaks to a longstanding objection — that banks may be the ones charging the fee, but they are not necessarily the ones deciding whether and when a declined payment is run through again (fair being fair, that is often up to the merchant or payee, which we’ll touch on in just a moment). But there’s also simply no denying that this is a retreat. The underlying practice here is not hard to understand — a consumer attempts a payment, the bank declines it for insufficient funds, the merchant or payee resubmits the same item, and the consumer may be charged another NSF fee on Brett Goodnack, JD, CAMS, Compliance Advisor Compliance Alliance 18 NEBRASKA BANKER
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